Shepard Davidson · Renee Inomata

How an Outsider’s Presence Affects the Attorney-Client Privilege

On more than one occasion, an in-house counsel has been summoned to a strategy meeting about a potential or ongoing dispute, and when he arrives, he finds an outside accountant already seated in the conference room ready to participate in the meeting. At this point, the in-house counsel’s gut reaction usually is to ban the accountant from the meeting so that the attorney-client privilege will not be destroyed. While excluding the accountant from the meeting may ultimately make sense, making that judgment without some serious reflection could deprive the client of insights that may come with little or no risk and/or may be worth the risk of waiving the privilege.

When faced with a situation like the above, the first thing in-house counsel should do is ask the question: “How much of a risk is there that the outsider’s presence will destroy the privilege?” As both the First Circuit and Second Circuit have held, a third-party’s presence will not destroy the privilege if her presence is:

[N]ecessary, or at least highly useful, for the effective consultation between the client and the lawyer….

And a person is “necessary” or “highly useful” if she is:

[N]early indispensable or serve[s] some specialized purpose in facilitating the attorney-client communications.

One test that I like to use to determine if a third party’s presence will destroy the privilege is to think of a spectrum with one end being third parties that are needed in the same way that a translator is needed when the lawyer and client speak different languages, and the other end being third parties that are needed purely for business advice and/or moral support.

Placing a third party on this spectrum usually gives me a fairly good idea as to how much risk there would be to the privilege if that person is present during an attorney-client communication.

In-house counsel also should consider the possibility of shuttling a third person in and out of a meeting so that she is present only when truly needed to facilitate the attorney-client communication. While this may seem cumbersome, explaining to the client and the third party at the outset of a meeting that you are going to ask the third party to leave at certain times and why you will do this, alleviates most, if not all, of the awkwardness.

Finally, even if in-house counsel were to conclude that having a third party present is highly likely to destroy the privilege, do not rule out the possibility that the third party’s input could be so important that it is worth risking a waiver of the privilege. In this regard, it also may be the case that even if the communications were disclosed to the public and/or an adversary, this will do little or no harm to your client.

Thus, the next time you are faced with the prospect of having a third party present during a privileged conversation or meeting, be sure to take a moment to evaluate all of the potentially relevant factors before determining whether or not to exclude the third party.

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About the In House Advisor

Shepard Davidson

Shepard Davidson

sdavison@burnslev.com Shep is a partner in and former Co-Chair of the Business Litigation group at Burns & Levinson. Shep concentrates his practice in the areas of complex business torts, contract claims, real estate disputes, and employment disputes.

Renee Inomata

Renee Inomata

rinomata@burnslev.com Renee is a Partner in and Chair of the Employment practice at Burns & Levinson. She has also litigated various employment disputes in state and federal courts and agencies.